Noah Kagan says he built AppSumo for $50. He wanted to create a website with discounts for premium services on various platforms. He started browsing the net and stumbled upon Reddit.
Redditors were posting a lot of links with Imgur pictures from Imgur Pro accounts. Kegan spotted an opportunity. He wrote an email to Imgur's CEO, and asked to make a deal. The man agreed. Kegan reached out to one of Reddit's CEOs. He cold-emailed him to get their permission for AppSumo's ad on Reddit. Kegan found a web developer. He made him two ads for the Imgur deal: one to put on Reddit, and then a better one to include on Imgur.
Imgur's founder took $7 from every subscription plan bought through AppSumo (AppSumo's price was $12.99), and the developer worked for $12 per hour. Kegan emailed people who bought the Imgur Pro accounts to send them individual registration codes.
Before the Imgur deal, Kagan tested a more generic version first: a simple landing page to collect email addresses, using his friend Paul's face in the header, to see whether people would pay for help getting web apps more customers. He came in already trained on growth, he had done marketing for Mint.com and, before that, was Facebook's 30th employee.
Kagan set a concrete bar before he would call this a real business: 200 sales. That number wasn't a guess, it was the line he drew in advance to decide whether to keep pushing or drop the idea. Once he crossed it, he treated the model as proven and built AppSumo around it. He has since turned that validation approach into a repeatable formula he teaches to thousands of people trying to start a business the same way.